What Are NFT Scams and How To Avoid Them?
Investors lost more than 3.2 billion USD in 2021 to crypto scams. And a big chunk of it was due to NFTs.
In early 2022 OpenSea, one of the largest marketplaces of NFTs admitted that around 80% of its NFTs are scams or spams, or mere fakes. Digital artists from all over the world have been complaining about online thefts, cyber-attacks, and frauds. Among the numerous examples is a popular artist Lois Van Baarle who reported that the online images of her art were stolen, minted as NFTs, and put up to trade on OpenSea.
NFT Scams have become a reason for anxiety in many. In an attempt to combat that, in this article, we have brought a list of NFT scams that you need to look out for and some tips to avoid them!
What Are NFTs and How Do They Work?
Before going into anything first we will learn in brief what is NFT and its working ways.
NFTs are Non-Fungible Tokens. They are a sort of digital proof that authenticates your ownership over a particular unique digital asset. Dealings in NFTs are legal ways of buying and selling the rights of ownership of a particular digital asset.
NFTs use blockchain technology, especially the one that powers Ethereum. That means like cryptocurrency transactions, NFT transactions too are maintained in a public ledger.
What Are NFT Scams?
There are some phishing sites or fake websites that sell fraudulent NFTs. Some cybercriminals use social engineering to hack into your crypto keys through advertisements and empty your online wallets. Sometimes they also try to sell you counterfeit digital assets. All this together is called NFT scams.
Types Of NFT Scams
So let’s discuss what are some of the common NFT scams.
We know that NFTs are NFTs because they are supposed to be unique. They are supposed to be non-replaceable. But some scammers make a copy of the original asset and put it out as the real one.
Once they are paid for the copied NFTs they tend to vanish from the platforms.
Sometimes through advertisements, you are directed to a site that looks exactly like an NFT platform. But in reality, it is not.
Now once you log in to your digital wallet and use the private keys, it is the way in for the criminals as they get access to all your wallet keys, and thereby they can empty your wallets and your collections anytime.
Fraudulent NFT Offers
Sometimes you might get an email claiming you have an NFT offer awaiting you in the below-given link or something. That link might take you to a counterfeit NFT marketplace. Here once you enter your login credentials, the scammers introduce Spyware and other techniques to have access to your accounts as well as to your NFTs.
Have you been the victim of those free offers? It’s generally on social media where you look at attractive objects from a particular shopping app. But once you click on the click you are most likely to give access to your account to the scammers.
Similarly, The scammers might host a fake NFT offer, with a made-up list of NFTs and their prices. These offers are made to be enticing. They will lull you in and then attack! Once you log in, all your account details are compromised.
Suppose you want to buy a famous digitized painting from the owner, who is an influencer. You know he will sell the original one because he is the owner.
But in this case, you might fall victim to what is referred to as social media impersonation where the scammer will build up the same profile as the influencer. The unsuspecting victims would buy from them and thereby be scammed.
Sometimes the scammers launch fake NFT projects with very alluring properties. As a result, superficial hype is built around it.
The victim is scammed in a way that once they buy this particular NFT, it becomes useless to the buyer because the future value of the NFT is not sure. It might not be resellable.
This is one of the most commonly used processes by scammers. Sometimes an entire group (of scammers) buys one NFT one at a time. This means that the money used in the NFT is circulating in that group only. But the unsuspecting victims have no idea about that. They will think, wow this item is being bought so much, I should buy it too. The victim falls for the false traction that is designed by the scammers.
And once they buy a token, it essentially becomes useless and non-resellable, thus Scammed!
Sometimes these scammers host fake bids, where many people start bidding. Here most of the bidders are from the scammer groups only. They keep bidding, giving the appearance that the NFT is popular. When real buyers falling for this ruse starts the bid, then the scammers sell the NFTs to the highest bidder.
Thus the value of the NFT was pretty much designed and not real. The buyer is left with an essentially valueless NFT for the future.
How To Avoid NFT Scams?
If NFTs are making headlines, so are NFT scams. Here are some ways to avoid the NFT scams.
We do not know what online phishing site might attack us when. We do not know which link can make our system vulnerable to attackers. Hackers use complex coding and social engineering to access our passwords and account details. The most we can do to prevent this is to use some complex and unique passwords for our cryptocurrency wallets and NFT accounts.
Continuing the topic of passwords we would also like to advise the obvious: Never share your private keys or your recovery passwords with anyone or anywhere. Even if the email that is asking you to share looks legit enough, just don’t.
Suppose you try to enter your mail from a new device. What is the first thing that Google asks after you enter your password? It asks for an OTP that it has sent to your phone number. This is done to ensure that it is you who is trying to log in from a different system. The password and OTP make the double authentication. Similarly, this can also be employed by yourself for your digital wallets and NFT accounts. This makes your security a little less prone to risks. One of the best authentication methods is biometrics. These are more difficult to replicate remotely.
To prevent yourself from getting scammed with fake NFTs, always check the details of the seller. Look for the blue tick beside their names if you are dealing with some famous crypto or NFT giant.
If you receive emails for bidding invitations or airdrop offers, do not jump on the wagon immediately. Verify and cross-check with people in the field about the sender of the email.
Try not to click on random links and attachments from emails, telegrams or advertisements however enticing might they look!
NFT scams are pretty common. At the beginning of 2022, it was reported that there was a rise in the number of Google searches that wanted to know how to deal with NFT scams.
With such cutting-edge technology comes the risk of cutting-edge cyber crimes as well. So you need to be aware of the NFT market as well as the market of scams.
Hope this article would help navigate the convoluted ways through NFT scams.